Martin Marietta Materials, a leading US maker of crushed stone and gravel, on Monday unveiled a hostile US$4.7 billion takeover bid for Vulcan Materials Co after private negotiations failed.
Martin Marietta said it had delivered a tax-free stock-swap offer to US rival Vulcan “to create a US-based company that is the global leader in construction aggregates with a footprint reaching across North America.”
“We are bringing our proposal directly to Vulcan’s shareholders after Vulcan ceased participating in private discussions toward a negotiated transaction, which commenced over a year-and-a-half ago,” Ward Nye, Martin Marietta’s president and chief executive, said in a statement.
As of Friday, the combined company would have a market capitalization at US$7.7 billion and a total value of US$11.4 billion, Martin Marietta said. The combined mineral reserves of the two companies would be 25.4 billion tons.
Under the terms of the buyout offer, Vulcan shareholders would receive half a Martin Marietta share for each share they own, representing a 15 percent premium, the Raleigh, North Carolina-based company said.
It also pledged to maintain the dividend for the combined company at Martin Marietta’s current rate of US$1.60 per share annually.
“This dividend rate is 20 times Vulcan’s current level,” Nye said.
Nye, in a letter to Vulcan shareholders, said the tie-up was expected to generate “significant” cost synergies ranging from US$200 million to US$250 million as -overlapping functions were eliminated.
“Recent events, including the fragile state of the US economy, the lack of visibility as to when a sustainable recovery will take place and the uncertainty surrounding government spending on infrastructure projects, only strengthen the rationale behind a combination,” he said.
Shares in Martin Marietta were up 3.4 percent at US$75.88 and Vulcan skyrocketed 17.6 percent to US$39.46 on the New York Stock Exchange, bucking sharp falls on Wall Street.